PAYDAY LENDING MARKET INVESTIGATION

Invitation to comment on survey questionnaire

26 September 2013

As notified in our ‘Appointment of market research agency and invitation to comment on survey methodology’ you are invited to comment on the following draft survey questionnaire.

We intend to conduct the main quantitative work using telephone interviews with loan customers. The sample will be drawn from customer lists provided to us by large lenders and will cover retail and online customers. We are also considering a second option of drawing part of our sample from a smaller number of lenders from which we will ask, additionally, for lists of customers who have just taken out new loans. This may result in an overall target sample size of more than the 1,500 previously indicated.

This draft questionnaire is estimated to take about 30 minutes to administer. We intend to reduce it to 20 minutes post the pilot interviewing.

Any comments on the questionnaire or survey methodology should be made by email to the Inquiry Manager, (Matthew.Weighill@cc.gsi.gov.uk) as soon as possible and in any event no later than 12pm on Monday 30 September 2013. Unfortunately we will be unable to consider any comments made after that deadline.

1

PAYDAY LENDING – DRAFT QUESTIONNAIRE INTRODUCTION Good morning/afternoon/evening. My name is … and I am calling from TNS BMRB, an independent research organisation. Am I speaking to [NAME FROM SAMPLE]? IF YES: CONTINUE WITH INTRODUCTION IF NO, ASK TO SPEAK TO [NAME FROM SAMPLE]. IF THIS PERSON IS NOT KNOWN, RECORD AN UNPRODUCTIVE OUTCOME.

DO NOT CONTINUE WITH INTRODUCTION UNTIL SPEAKING TO CORRECT PERSON.

We are carrying out research for the Competition Commission in relation to the Payday Lending Market and other aspects of consumer credit. IF NECESSARY: A payday loan typically involves borrowing £200-300 although it could be up to £1,000. Loans typically have to be paid back within 25-30 days, although you may get a loan for up to 12 months and some loans are paid back in a shorter period than 25-30 days. You details have been passed to the Competition Commission by [NAME OF LENDER] as one of their customers. You should have received a letter about the survey, explaining why it is being conducted and that we will be contacting you. IF RESPONDENT SAYS THEY HAVE NOT RECEIVED LETTER AND WOULD LIKE TO SEE THIS BEFORE CONTINUING TAKE DETAILS AND ARRANGE TO CALL BACK.

IF NECESSARY: The Competition Commission is allowed to request personal information from [NAME OF LENDER] under the terms of the Data Protection Act 1998. This applies even though you might have opted out of further communication at the time of your agreement with [NAME OF LENDER].

IF NECESSARY: As part of its activities, the Competition Commission is required by law to carry out investigations into market practices, and to obtain the information needed in order to carry out these investigations. That’s why the Competition Commission is exempt from the provisions of the Data Protection Act that would usually prevent [NAME OF LENDER] from sharing your details with a third party. ONCE SPEAKING TO CORRECT RESPONDENT: Would you be able to spare around 20 minutes to answer some questions?

1) Yes (CONTINUE) 2) No (RECORD OUTCOME)

2

SECTION 1: SCREENING The purpose of this section is to screen customers to ensure they took out (or recall taking out) the sampled loan – i.e. the one they are being asked about in the bulk of the interview. We will then focus them in specifically on this loan. ASK ALL Qsc1. According to our records you took out a loan from [name of sampled lender] on [date of sampled loan]. Is this correct?

1. Yes 2. No

IF Qsc1 = Yes: CONTINUE TO SECTION 2 IF Qsc1 = No: ASK Qsc2, THEN SCREEN OUT ASK IF Qsc1 = 2 Qsc2. Have you taken out a payday loan from a lender at any time since 1st

January 2012? This could either be from a high street lender or an online lender.

IF NECESSARY: Sometimes payday loans may be called something else. For example, little loans, express loans, wage day loans, short term loans or instalment loans. A payday loan typically involves borrowing £200-300 although it could be up to £1,000. Loans typically have to be paid back within 25-30 days, although you may get a loan for up to 12 months and some loans are paid back in a shorter period than 25-30 days.

1. Yes 2. No 3. Don't know

3

SECTION 2 - QUESTIONS ON SAMPLED LOAN This section deals specifically with the sampled loan. We first deal with the background to this loan and then go through the decision making process. The more specific questions (e.g. whether looked at certain costs) are included later in this section. ASK ALL Intro1. I am now going to ask you some questions about the loan you took out from [name of sampled lender] on [date of sampled loan]. Please only think about this loan

and not any others you may have taken out unless I specifically ask you to consider other loans. I will sometimes refer to this as a 'payday loan' during the interview.

SECTION 2a - BACKGROUND TO THE LOAN This section covers some key background information to the loan- e.g. whether first loan, reason for taking out loan, how intending to pay the money back. It is intended to both provide important profiling information and also help set the scene for the sections that follow. ASK ALL Qpdsa1. Can I just check, was this your first payday loan, or had you taken out other payday before this, either with the same lender or with another lender? IF NOT SURE: Had you taken out any other loans before [date of sampled loan]?

1. First payday loan taken out 2. Had taken out other payday loans before this 3. Don't know 4. Refused

ASK IF Qpdsa1 = 1 Qpdsa2. And is the loan you took out with [name of sampled lender] on [date of sampled loan] the only payday loan you have taken out – or have you taken out any other payday loans since this?

1. Only payday loan taken out 2. Taken out other payday loans since this 3. Don't know 4. Refused

ASK ALL Qpdsa3. What did you use the money you borrowed for? IF RESPONDENT SAYS THEY HAVE NOT YET USED THE MONEY YET ASK: What do you plan to use the money for? IF NECESSARY: Please also include anything you partly

used the money you borrowed for.

DO NOT PROMPT. CODE ALL THAT APPLY.

1. Living expenses – e.g. food, grocery shopping, household bills or rent or mortgage payments 2. Essential repairs or to replace household items that had broken 3. A birthday or Christmas present or other gift 4. A holiday 5. Going out or socialising 6. To pay off another loan or outstanding debt 7. Other (specify) 8. Don't know 9. Refused

4

ASK ALL Qpdsa4. And, can I just check, would you say that this was... READ OUT AND SELECT ONE. IF NOT SURE: Please pick the statement that you feel best describes your situation at the time you took out the loan.

1. An essential expense that you couldn't have gone without 2. Something that you felt you needed at the time but could possibly have got by without 3. Or something you could easily have gone without? 4. SPONTANENOUS ONLY: None of these/too difficult to say 5. Refused

ASK ALL Qpdsa5. At the time you took out the loan, how did you intend to repay it? Was it... READ OUT AND CODE ALL THAT APPLY.

1. From wages or other earnings 2. From savings 3. From borrowing money from friends or family 4. From taking out another loan 5. From selling something 6. Or from some other source (specify)? 7. Don't know 8. Refused

ASK ALL Qpdsa6. Did you need this loan because of... READ OUT AND CODE ALL THAT APPLY.

1. An unexpected increase2. An unexpected

in expenses or outgoings decrease

3. Or neither of these [SINGLE CODE]? in income

4. Don't know 5. Refused

ASK IF Qpdsa6 = 1 or 2 Qpdsa7. And did you believe that this change in your financial circumstances would be temporary or permanent?

1. Temporary 2. Permanent 3. SPONTANEOUS ONLY: Did not know at the time 4. Refused

ASK IF Qpdsa1 = 2 Qpdsa8. And can I just check, was the reason that you needed a loan in any way connected to being left short of money because you needed to repay a previous payday loan?

1. Yes 2. No 3. Don't know 4. Refused

SECTION 2b - OTHER WAYS OF GETTING THE MONEY

5

The section is designed to deliver key information on the decision making process involved in taking out a PDL, including alternatives considered and availability of other forms of credit. ASK ALL Qpdsb1. On this particular occasion, why did you choose to get a payday loan rather than borrow the money in any other way? DO NOT PROMPT. CODE ALL THAT APPLY.

1. Needed the money urgently/could not get as quickly elsewhere 2. Process of taking out a payday loan is very convenient/easy 3. Could not borrow the money from anywhere else 4. They would only let me borrow what I could afford to repay 5. It is the only way to get a very short term loan 6. It is the only way to get such a small sum of money 7. No credit check required or only a minimal credit check 8. Cheaper than other types of lending 9. Did not want to be tied into a long term relationship 10. Other (specify) 11. Don't know 12. Refused

ASK ALL Qpdsb2. If you had not been able to get a payday loan on this occasion, what do you think you would have done instead? DO NOT PROMPT AND CODE ONE ONLY. INCLUDE PAWNBROKING UNDER 'BORROWED IN SOME OTHER WAY'

1. Gone without 2. Sold something 3. Used savings I already had 4. Saved up until I had the money 5. Borrowed6. Asked a friend or relative to

from a friend or relative give

7. Borrowed in some other way you the money or buy things on your behalf

8. Defaulted on another loan 9. Something else (specify) 10. SPONTANEOUS ONLY: Don't know/too hard to say 11. Refused

ASK IF Qpdsb2 = 7 Qpdsb3. And how do you think you would have been most likely to borrow the money? DO NOT PROMPT. CODE ONE ONLY.

1. Credit card 2. Authorised overdraft 3. Unauthorised overdraft 4. Home credit (a company that collects payments from your home) 5. Pawnbroker loan 6. Loan from a credit union 7. Personal loan from a bank or building society 8. An unlicensed lender (loan shark) 9. Depends on the amount needed/varies too much to say 10. Some other way (specify)

6

11. Don't know 12. Refused

ASK ALL Qpdsb4. Apart from [name of lender] or any other payday lenders, did you consider

borrowing the money through any of the following sources?

READ OUT AND CODE ALL THAT APPLY.

1. A credit card 2. An authorised overdraft 3. An unauthorised overdraft 4. Home credit (a company that collects payments from your home) 5. A pawnbroker loan 6. A loan from a credit union 7. A personal loan from a bank or building society 8. An unlicensed lender (loan shark) 9. None of these 10. Don't know 11. Refused

ASK IF Qpdsb4 = 9 Qpdsb5. Why did you not

consider any of these alternative sources before taking out the payday loan?

DO NOT PROMPT. CODE ALL THAT APPLY.

1. No time to compare – needed to get hold of the money as quickly as possible 2. Had positive experience with payday loan before/found to be a convenient method 3. Would not know what/how to compare 4. Had bad experience with other forms of credit/borrowing before 5. No other option – could not borrow money from anywhere else 6. Nowhere else lends such a small sum of money/not worth going elsewhere for such a small sum 7. Other (specify) 8. Don't know 9. Refused

ASK IF Qpdsb4 = ANY OF CODES 1-8 Qpdsb6. Did you actually get to the stage of comparing the pros and cons of [this alternative/any of these alternatives] against the pros and cons of a payday loan, for example, comparing how much you would have to pay back, how long it would take to get the money, or any other relevant factor? IF NECESSARY: You said you considered borrowing the money through... [LIST OF THINGS MENTIONED AT Qpbs4] IF YES: Which alternatives did you compare with a payday loan? [DISPLAY ONLY ITEMS SELECTED AT Qpbsb2]

1. Credit card 2. Authorised overdraft 3. Unauthorised overdraft 4. Home credit (a company that collects payments from your home) 5. Pawnbroker loan 6. Loan from a credit union 7. Personal loan from a bank or building society

7

8. An unlicensed lender (loan shark) 9. Did not compare the pros and cons of other alternatives 10. Don't know 11. Refused

ASK IF Qpdsb4 = ANY OF CODES 1-8 Qpdsb7. Thinking about the other alternatives you compared, what did you take into account when comparing them against a payday loan? DO NOT PROMPT. CODE ALL THAT APPLY.

1. The time taken to apply for the loan 2. How quickly the loan would be granted 3. The information you were asked for when applying for the loan 4. The amount you could take out 5. The repayment period 6. The total cost of the loan (i.e. the total amount repayable) 7. The charges that would be applied if you could not pay back on time 8. The ability to repay in instalments 9. The flexibility to top-up a loan during the credit agreement 10. The reputation of the lender 11. Previous experience of that lender 12. Other (specify) 13. Don't know 14. Refused

ASK ALL Qpdsb8. Now think about other options that may have been available for you to borrow the money instead of taking out a loan from [name of sampled lender]. It doesn't matter if you did not consider these options: I'm only interested in whether you feel they would have been available

to you.

At the time you took out your loan from [name of lender], do you think you would have been able to borrow the same or a higher amount using... READ OUT AND CODE ALL THAT APPLY.

1. A credit card 2. An authorised overdraft 3. An unauthorised overdraft 4. Home credit (a company that collects payments from your home) 5. A pawnbroker loan 6. A loan from a credit union 7. A personal loan from a bank or building society 8. None of these 9. Don't know 10. Refused

ASK ALL Qpbsb9. In the 12 months before taking out the loan with [name of lender], were you turned down for any of the following types of credit? READ OUT AND CODE ALL THAT APPLY.

1. A credit card 2. An authorised overdraft 3. An unauthorised overdraft 4. Home credit (a company that collects payments from your home)

8

5. A pawnbroker loan 6. A loan from a credit union 7. A personal loan from a bank or building society 8. None of these 9. Don't know 10. Refused

ASK ALL Qpbsb10. And, can I just check, did you have any savings or could you have sold something to raise the money instead of taking out the loan from [name of lender]?

1. Yes – had savings 2. Yes – could have sold something 3. No – neither of these [SINGLE CODE] 4. Don't know 5. Refused

ASK IF Qpbsb10 = 1 or 2 Qpbsb11. Why did you choose to borrow the money from [name of lender] rather than [IF Qpbsb10 ONLY = 1: using your savings / IF Qpbsb10 ONLY = 2: selling something / IF Qpbsb10 = 1 AND 2: using your savings or selling something]? OPEN RESPONSE (FOR PILOT) ASK ALL Qpdsb12. Which of the following best describes the reason you took out a payday loan

to provide the money you needed?

IF NECESSARY: If neither of these statements exactly

describes your situation please choose the one that you feel comes closest to your circumstances.

READ OUT AND SELECT ONE ONLY. [ROTATE CODES 1 AND 2]

1. Taking out a payday loan was my first choice for providing the money I needed 2. I used a payday loan as a last resort as other options were not available to me 3. SPONTANEOUS ONLY (DO NOT READ OUT): Neither of these/in-between these options 4. Don't know 5. Refused

ASK IF Qpdsb12 = 2 Qpdsb13. Why were no other options available to you? OPEN RESPONSE (FOR PILOT) SECTION 2c - THE IMPORTANCE OF DIFFERENT FEATURES OF THE PAYDAY LOAN This section focuses on the importance of different features/aspects in applying for a PDL. The aim here is to capture the importance of each of these factors and the single factor that was seen as most important. This will help establish the importance of cost vs. convenience/speed, etc. ASK ALL Qpdsc1. When you were taking out your payday loan, how important was: [RANDOMISE ORDER OF ITEMS]

• The time taken to apply for the loan

9

• How quickly the loan would be granted • The information you were asked for when applying for the loan • The amount you could take out • The repayment period • The total cost of the loan (i.e. the total amount repayable) • The charges that would be applied if you could not pay back on time • The ability to repay in instalments • The flexibility to top-up a loan during the credit agreement • The reputation of the lender • Previous experience of that lender

1. Very important 2. Fairly important 3. Not very important 4. Not at all important 5. Not applicable 6. Don't know 7. Refused

ASK IF 2+ FACTORS ALL MOST IMPORTANT AT Qpdsc1 Qpdsc2. You said that a number of factors were equally important. Which of these would you say was the most important factor? READ OUT AND SELECT ONE ONLY. [LIST OF FACTORS BASED ON RESPONSES AT Qpds30] Don't know Refused ASK IF NO FACTORS VERY IMPORTANT AT Qpdsc1 Qpdsc3. You said that none of the factors we asked about were very important in choosing your loan. Can I just check, are there other factors that were important to you that we did not ask about? WRITE IN RESPONSE (FOR PILOT) No important factors SECTION 2d - AWARENESS OF PAYDAY LOAN PROVIDERS AND DIRECT OFFERS This section differs slightly from the rest of section 2 in that some of the questions ask the customer to think more generally about their experience with a lender and not just about the sampled loan. The reason for placing these questions here is to provide context for the questions on shopping around between lenders that follow. We have taken care to ensure that text is included to refer customers to these general questions and back to questions on the specific loan where required. ASK ALL Qpdsd1. Can I just check, how did you first hear about [name of sampled company]? Please think about when you first found out about [name of company] and not just in relation to the loan you took out on [date of sampled loan]. OPEN RESPONSE [FOR PILOT] Can't remember ASK ALL Qpdsd2. Which, if any, of the following companies have you heard of?

10

READ OUT AND CODE ALL THAT APPLY. ASK ALL Qpdsd3. And thinking about the loan you took out with [name of sampled lender] on [date of sampled loan], did you approach them to apply for a loan or did they approach you directly to offer you a loan?

1. I approached them 2. They approached me 3. Don't know/can't remember 4. Refused

ASK IF Qpdsd3 = 1, 3 or 4 Qpdsd4. Can I just check, have you ever

been directly contacted by a payday loan company to offer you a new loan or to advertise one of their offers?

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qpdsd4 = 1 or Qpds3 = 2 Qpdsd5. And how many times have you been contacted by a payday loan company to offer you a loan? [IF Qpdsd4 = 2: Please think about all loans you have been offered, including the one you took out with [name of lender] on [date of loan]. INTERVIEWER: ACCEPT ESTIMATE.

1. Once 2. Twice 3. Three times 4. More than three times 5. Don't know 6. Refused

SECTION 2e - SHOPPING AROUND This is a key section of the questionnaire, focusing on shopping around between payday loan companies. We ask those who said they did not

shop around for the sampled loan whether they ever shopped around when taking out a payday loan. If they did this, we then ask the same set of follow-up questions but in relation to the last loan they shopped around for. The questions are consistent throughout but linking text has been added to constantly remind respondents what we are asking in relation to. These two groups can be separated out at the analysis stage.

ASK ALL Now please think again about the loan you took out from [name of sampled lender] on [date of sampled loan]. ASK ALL Qpdse1. Apart from [name of lender], did you consider

borrowing the money from any other payday lenders?

1. Yes – considered other lenders 2. No – did not consider any other lenders 3. Don't know 4. Refused

11

ASK IF Qpdse1 = 1 Qpdse2. Did you actually get to the stage of comparing the pros and cons of different lenders, for example, comparing how much you would have to pay back, how long it would take to get the money, or any other relevant factor?

1. Yes - compared pros and cons of different lenders 2. No - just looked at this one lender 3. Don't know 4. Refused

ASK IF Qpdse2 = 2 and (Qpdsa1 = 2 or Qpdsa2 = 2) Qpdse3. Now think about all the times you have taken out a payday loan. Have you ever

compared the pros and cons of different lenders, for example how much you would have to pay back, how long it would take to get the money, or any other relevant factor?

1. Yes - compared pros and cons of different lenders 2. No - just looked at this one lender 3. Don't know 4. Refused

IF Qpdse2 = 1 For the next few questions please continue to think about the loan you took out from [name of sampled lender] on [date of sampled loan]. IF Qpdse3 = 1 For the next few questions please think about the last time

you compared lenders when taking out a payday loan.

ASK IF Qpdse2 = 1 or Qpdse3 = 1 Qpdse4. You say that you compared different lenders before taking out this loan. Did you find out... READ OUT AND CODE ALL THAT APPLY.

1. Whether you would likely be eligible for a loan from another payday lender 2. How long it would take to apply for a loan with another lender 3. How quickly the loan would be granted by another lender 4. The amount you could take out with another lender 5. How long you could take a loan out for with another lender 6. How much it would cost to borrow the same amount from another lender 7. None of these 8. Don’t know 9. Refused

ASK IF Qpdse2 = 1 or Qpdse3 = 1 Qpdse5. And how did you go about getting information that allowed you to compare the pros and cons of different lenders? Did you... READ OUT AND CODE ALL THAT APPLY.

1. Visit the websites of payday loan companies 2. Visit high street shops of payday loan companies 3. Visit a comparison website 4. Speak to payday lenders over the phone 5. Review literature sent to you by lenders 6. Or do something else? 7. Don't know 8. Refused

ASK IF Qpdse2 = 1 or Qpdse3 = 1

12

Qpdse6. Approximately how long did you spend finding out about different lenders and their products? INTERVIEWER: ACCEPT ESTIMATE. ENTER NUMBER OF MINUTES. Don't know/can't remember IF Qpdse2 = 1 Please continue to think about the loan you took out from [name of sampled lender] on [date of sampled loan]. IF Qpdse3 = 1 Please continue to think about the last time

you compared lenders when taking out a payday loan.

ASK IF Qpdse2 = 1 or Qpdse3 = 1 Qpdse7. How many different lenders did you compare before taking out this loan? Please include

the lender you took out the loan with.

1. Two 2. Three 3. Four 4. Five 5. Six or more 6. Don't know 7. Refused

ASK IF Qpdse2 = 1 or Qpdse3 = 1 Qpdse8. And did you compare...

1. Only online lenders 2. Only high street lenders 3. Or a mix of online and high street lenders? 4. Don't know 5. Refused

ASK IF Qpdse2 = 1 or Qpdse3 = 1 Qpdse10. On this occasion, what were the reasons that you decided to take out a loan from the lender you chose rather than the other companies you considered? OPEN RESPONSE (FOR PILOT) SECTION 2f - BARRIERS TO SHOPPING AROUND This section focuses on reasons customers do not shop around between lenders. The first question is asked of both those who shopped around for the sampled loan and (for those who did not do this) it is asked in relation to the last loan they shopped around for. The specific question on barriers to shopping around (Why did you not shop around and compare...) is asked specifically in relation to the sampled loan – so anyone who did not shop around in relation to this loan will be asked about barriers (even if they had previously shopped around). IF Qpdse2 = 1 Still thinking about the loan you took out from [name of sampled lender] on [date of sampled loan]. IF Qpdse3 = 1 Still thinking about the last timeASK IF Qpdse2 = 1 and Qpdse3 = 1

you compared lenders when taking out a payday loan.

Qpdsf1. You said that you compared the pros and cons of taking out a payday loan across a number of lenders. Was there anything that stopped you comparing across a larger number of lenders?

13

DO NOT PROMPT. CODE ALL THAT APPLY

1. Not enough time 2. Couldn't be bothered 3. Didn't need to / have done this before 4. Know they are all much the same 5. Didn't want to fill in more forms/provide more information 6. Couldn't find the information needed to compare 7. Other (specify) 8. Don't know 9. Refused

ASK IF Qpdse1 = 2 or Qpdse2 = 2 Qpdsf2. Why did you not shop around and compare the pros and cons of different lenders when taking out your loan from [name of sampled lender] on [date of sampled loan]? DO NOT PROMPT. CODE ALL THAT APPLY.

1. Got approval from the first lender approached 2. Happy with first product looked at – did not need to find out what else was available 3. All lenders likely to be the same – little point comparing 4. Already aware of other products on the market 5. Have used [name of sampled lender] before 6. Difficult to access information on/from other lenders 7. Needed to get loan quickly – no time to shop around 8. Would not know how to compare lenders 9. Was approached directly by the lender 10. Other (specify) 11. Don't know 12. Refused

ASK IF Qpdsf2 = 5 Qpdsf3. You said that you did not shop around because you had used [name of sampled lender] before. Did you use the same lender again for any of the following reasons? READ OUT AND CODE ALL THAT APPLY.

1. You were happy with the overall service they provided before 2. They allowed you to borrow more as a repeat customer 3. You felt there would more chance of being approved for a loan as a repeat customer 4. You did not want to owe money to another lender 5. They contacted you to offer you a loan 6. Or any other reasons (specify) 7. None of these 8. Don't know 9. Refused

SECTION 2g - ACCESS TO AND UNDERSTANDING WHEN COMPARING LENDERS This section drills down specifically to information looked at when choosing a lender/applying for a loan and ease of finding, understanding this, etc. The questions are asked both of those who shopped around for the sampled loan and (if not) the last loan they shopped around for. IF Qpdse2 = 1

14

For the next few questions please continue to think about the loan you took out from [name of sampled lender] on [date of sampled loan]. IF Qpdse3 = 1 For the next few questions please think about the last time

you compared lenders when taking out a payday loan.

ASK IF Qpdse2 = 1 or Qpdse3 = 1 Qpdsg1. Overall, how easy or difficult would you say it was to find out

the information you needed in order to be able to compare lenders?

1. Very easy 2. Fairly easy 3. Fairly difficult 4. Very difficult 5. Don't know 6. Refused

ASK IF Qpdsg1 = 3 or 4 Qpdsg2. What made it difficult to find out the information you needed? OPEN RESPONSE (FOR PILOT) ASK IF Qpdse2 = 1 or Qpdse3 = 1 Qpdsg3. How easy or difficult would you say it was to understand

the information you used when comparing lenders?

1. Very easy 2. Fairly easy 3. Fairly difficult 4. Very difficult 5. SPONTANEOUS ONLY: Could not find any information 6. Don't know 7. Refused

ASK IF Qpdsg3 = 3 or 4 Qpdsg4. What specific information did you find difficult to understand? OPEN RESPONSE (FOR PILOT) ASK IF Qpdsg3 = 3 or 4 Qpdsg5. And what made the process of comparing the information difficult? OPEN RESPONSE (FOR PILOT) SECTION 2h - ACCESS TO INFORMATION WHEN TAKING OUT SAMPLED LOAN ASK ALL For the next few questions please think about the loan you took out from [name of sampled lender] on [date of sampled loan]. ASK ALL Qpdsh1. Do you feel you had access to all of the information you needed in order to make a decision to take out this payday loan from [name of sampled lender]?

1. Yes 2. No 3. Don't know 4. Refused

15

ASK IF Qpdsh1 = 2 Qpdsh2. What, if any, additional information would you have liked to help you make a decision? OPEN RESPONSE (FOR PILOT) ASK ALL Qpdsh3. Before taking out the loan, did you look at any of the following costs or charges? READ OUT AND CODE ALL THAT APPLY.

1. The total cost of the loan (i.e. the total amount repayable) 2. The total amount of interest that would be charged over the loan period 3. The APR 4. Any administration or set-up fees 5. The charges that would be applied if you could not pay back on time 6. Any other costs or charges (specify) 7. None of these 8. Don't know 9. Refused

ASK IF ANY OF CODES 1-5 SELECTED AT Qpdsh3 LOOP Qpdsh4 FOR ALL RESPONSES (CODES 1 – 5) SELECTED AT Qpdsh3 Qpdsh4.Thinking about [INSERT TEXT FROM Qpdsh3]… How well did you understand this before taking out the loan?

1. Very well 2. Fairly well 3. Not very well 4. Not at all well 5. Don't know 6. Refused

ASK IF Qpdsh3 = 7 (NONE OF THESE) Qpdsh5. You said you did not look at any of these costs or charges before taking out your loan with [name of provider from sample]? Why was this? DO NOT PROMPT. CODE ALL THAT APPLY.

1. Had taken out the loan before and so understood the cost 2. Would not understand costs/charges 3. Needed money quickly – no time to look at costs/charges 4. Did not know where to find this information 5. Did not want too much information – just wanted to take out the loan 6. Planned to pay back on time so did not apply to me 7. Other (specify) 8. Don't know 9. Refused

ASK ALL Qpdsh6. Can I just check, at the time you took out the loan how much did you think you would have to pay back in total? If you are not sure please give your best estimate. ENTER COST OF LOAN Don't know Refused

16

ASK AMOUNT ENTERED AT Qpdsh6 Qpdsh7. And does that include… READ OUT AND CODE ALL THAT APPLY.

1. The amount you borrowed 2. The interest charged on the amount you borrowed 3. Any administrative or set-up fees 4. Any penalty charges or rollover fees 5. Fees paid to a broken or other third party 6. Any other costs (specify) 7. Don't know 8. Refused

SECTION 2i - REPAYING THE LOAN This section deals with issues around repaying the sampled loan, including confidence in relation to repayments, repayment behaviour and experience of rollovers (and awareness of this option). ASK ALL For the next few questions please continue to think about the loan you took out from [name of sampled lender] on [date of sampled loan]. ASK ALL Qpdsi1. Can I just check, has the original repayment date for your loan with [name of sampled lender] now passed?

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qpdsi1 = 1 Qpdsi2. Did you repay the loan in full by the repayment date?

1. Yes – repaid in full 2. No – missed repayment date 3. Don't know 4. Refused

ASK ALL Qpdsi3. Thinking back to when you first took the loan out

, how confident were you that you would be able to repay the loan on the date originally agreed with [name of provider from sample]? Were you…

READ OUT

1. Very confident 2. Fairly confident 3. Not very confident 4. Or not at all confident? 5. Don't know 6. Refused

ASK IF Qpdsi3 = 3 or 4 Qpdsi4. Why were you not confident of being able to repay the loan? OPEN RESPONSE (FOR PILOT)

17

ASK ALL Qpdsi5. Continue to think back to when you first took this loan out. Did you think that repaying the loan on time would leave you enough money to get by until your next payday without having to take out a new loan?

1. Yes – would have enough to get by until next payday 2. No – would need to take out new loan to get by 3. Not applicable – loan not linked to payday 4. Don't know 5. Refused

ASK ALL Qpdsi6. Did you find getting the money

you needed to repay the loan...

READ OUT

1. Much easier than expected 2. A little easier than expected 3. A little more difficult than expected 4. Much more difficult than expected 5. Or about as you expected? 6. Don't know 7. Refused

ASK IF Qpdsi6 = 3 or 4 Qpdsi7. Why do you say you found repaying the loan more difficult than expected? OPEN RESPONSE (FOR PILOT) ASK ALL Qpdsi8. At the time you took your loan out, did you find out how much extra it would cost if you needed to extend the loan (sometimes called a rollover)?

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qpdsi2 = 2 Qpdsi9. Still thinking about the loan you took out with [name of sampled lender] on [date of sampled loan]. Did you... READ OUT

1. Extend or renew this loan, sometimes known as a rollover 2. Arrange a repayment plan with the lender 3. Default on the loan 4. Or do something else? 5. Don't know 6. Refused

ASK IF Qpdsi9 = 1 Qpdsi10. And were you aware of the possibility of extending or renewing a loan (sometimes known as rolling over) before

taking out this loan with [name of lender]?

1. Yes 2. No 3. Don't know 4. Refused

18

ASK IF Qpdsi10 = 1 Qpdsi11. When did you become aware of the option of extending or renewing the loan (sometimes known as rolling over)?

1. During the loan application process 2. During the course of the loan 3. At the time the loan was due 4. Don't know 5. Refused

ASK ALL Qpdsi12. Taking everything into account, was/is the total amount that you had/will have to repay more than, less than or about what you originally expected when you took out this loan?

1. More 2. Less 3. About what I expected 4. SPONTANEOUS ONLY: I didn't know what it would cost 5. Don't know 6. Refused

ASK IF Qpdsi5 = 1 Qpdsi13. Earlier you said that you felt paying this loan back on time would give you enough money to get by until your next payday without taking out a new loan. Can I just check, did you have enough to get by without a new loan or did you need to take out a new loan?

1. Had enough to get by without need for new loan 2. Needed to take out a new loan 3. Don't know 4. Refused

SECTION 2j - FUTURE IMPLICATIONS OF THE LOAN This is a short section with just two questions and follow-ups on future intentions. ASK ALL Qpdsj1. Taking everything into account, do you think you will take out another payday loan in the future?

1. Yes 2. No 3. Undecided 4. Refused

ASK IF Qpdsj1 = 2 Qpdsj2. Why do you say that you would not take out a payday loan again in the future? OPEN RESPONSE [FOR PILOT] ASK IF Qpdsj1 = 1 Qpdsj3. And do you think you would take out a loan from [name of provider] in the future?

1. Yes 2. No 3. Undecided 4. Refused

19

ASK IF Qpdsj3 = 2 Qpdsj4. Why do you say that you would not take out a loan from [name of provider] again in the future? OPEN RESPONSE [FOR PILOT]

20

PART 3 – ACTIVITY IN THE PAYDAY LOAN MARKET This more general section deals with overall experience and activity in the payday loan market. The focus is on issues around moving (or not moving) between lenders. There are also questions included to assess the relationship between online and retail lending. ASK ALL I'm now going to ask you some general questions about payday loans. Here we are using the term 'payday loan' to refer to all loans which involve borrowing up to £1,000 from a lender for a period of up to 12 months either through a shop, online, by phone or text. A typical payday loan might involve borrowing £200-£300 from a lender for a period of around 25-30 days, or even shorter periods in some cases. So please think about all the loans of this type you have taken out in the past even if they had different names. ASK ALL Qpdg1. In total, how many payday loans have you taken out? Please include both current loans and loans you have taken out in the past from all

lenders.

IF NECESSARY: Please give me your best estimate if you are not sure. NUMERIC RESPONSE Don't know Refused ASK IF Qpdg1 > 1 Qpdg2. Have [IF Qpdg1 = 2: both / IF Qpdg1 > 2: all of] your loans been from the same lender or have you taken out loans from more than one payday lender?

1. Both/all from same lender 2. Have taken out loans from more than one lender 3. Don't know 4. Refused

ASK IF Qpdg1 > 2 and Qpdg2 = 2 Qpdg3. How many different payday lenders have you taken out loans from? IF NECESSARY: Please give me your best estimate if you are not sure. NUMERIC RESPONSE Don't know Refused ASK IF Qpdg2 = 1 Qpdg4. You say that you have taken out all your loans from the same payday lender. Have you considered going to a different

lender for a payday loan?

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qpdg4 = 2 Qpdg5. Why have you not considered going to another lender? DO NOT PROMPT. CODE ALL THAT APPLY.

1. Not aware of any other lenders

21

2. Happy with service provided by current lender 3. Don't want to owe money to more than one lender 4. Too difficult/not enough time to compare lenders 5. Process of changing to a new lender would be time-consuming 6. Have never thought about other lenders 7. All lenders will be the same – no point in changing 8. Other (specify) 9. Don't know 10. Refused

ASK IF Qpdg4 = 1 Qpdg6. You say that you have considered going to a different lender. Why have you not actually taken out a loan from another lender? DO NOT PROMPT. CODE ALL THAT APPLY.

1. They refused my application 2. Loans offered are worse/no better than lender I use 3. Tried to compare lenders but was too difficult 4. Decided it was too much hassle/effort to change 5. Been offered benefits by my lender – e.g. reduced charges/higher loans available for future 6. Other (specify) 7. Don't know 8. Refused

ASK IF Qpdg2 = 2 Qpdg7. You say that you have taken out loans from more than one lender. Were any

of these loans taken out at the same time, or were all taken out at different times?

INTERVIEWER: BY 'AT THE SAME TIME' WE MEAN THAT THEY TOOK A LOAN OUT BEFORE ANOTHER ONE HAD BEEN PAID OFF – I.E. TWO LOANS 'ACTIVE' AT THE SAME TIME.

1. Some/all at same time 2. All at different times 3. Don't know 4. Refused

ASK IF Qpdg7 = 1 Qpdg8. Why did you decide to go to another lender rather than borrow more from your existing lender? DO NOT PROMPT. CODE ALL THAT APPLY.

1. Existing lender would not grant a higher/further loan 2. Wanted to spread loans across lenders 3. Poor service provided by existing lender 4. Found a better deal with a different lender 5. Other (specify) 6. Don't know 7. Refused

ASK IF Qpdg7 = 2 Qpdg9. What caused you to change your lender? IF RESPONDENT HAS CHANGED LENDER MORE THAN ONCE, ASK THEM TO THINK ABOUT THE FIRST TIME THEY CHANGED TO A NEW LENDER

1. Refused loan by previous lender

22

2. Poor service provided by previous lender 3. Found a better deal with a different lender 4. Other (specify) 5. Don't know 6. Refused

ASK IF Qpdsa1 = 2 Qpdg10. Now I'd like you to think back to when you first took out a payday loan. Can you tell me what year you first took out a payday loan? IF NECESSARY: Please give me your best estimate if you are not sure. ENTER YEAR Don't know Refused ASK ALL Qpdg11. Thinking about all payday loans you have ever taken out since [YEAR ENTERED AT Qpdg9], what best describes your situation? READ OUT

1. I have only2. I have

taken out payday loans from high street lenders through a shop only

3. I have taken out payday loans from taken out payday loans from online lenders via the internet, by phone, text or app

both4. Don't know

high street lenders and online lenders

5. Refused ASK IF Qpdg11 = 3 Qpdg12. Where would you say you mainly

get payday loans from?

1. High street lenders 2. Online lenders 3. Not possible to say – use both equally 4. Don't know 5. Refused

ASK IF Qpdg11 = 2 Qpdg13. Have you ever considered taking out a loan from a shop through a high street lender?

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qpdg13 = 2 Qpdg14. Why have you not considered taking out a loan from a high street lender? DO NOT PROMPT. CODE ALL THAT APPLY.

1. Was not aware that high street lenders existed 2. Prefer the convenience of online 3. Prefer the anonymity of online/stigma associated with going into a shop 4. Quicker/easier to take out a loan online 5. Online is easier for repeat use 6. Easier to compare different lenders/products online

23

7. Mobility issues 8. Don’t consider they offer the same service/products as online lenders 9. No shop nearby 10. Other (specify) 11. Don't know 12. Refused

ASK IF Qpdg11 = 1 Qpdg15. Have you ever considered taking out a loan through the internet, by phone, text, or app from an online lender?

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qpdg15 = 2 Qpdg16. Why have you not considered taking out a loan from an online lender? DO NOT PROMPT. CODE ALL THAT APPLY.

1. Was not aware online lenders existed 2. Convenience of location/have a shop nearby 3. Do not have a computer/internet access 4. Don't like dealing with financial issues online 5. Don't like providing personal information online 6. Prefer to speak to someone face-to-face 7. Too easy/too quick to take out a loan online 8. Able to get advice/information from shop staff 9. Don’t consider they offer the same service/products as high street lenders 10. Other (specify) 11. Don't know 12. Refused

ASK IF Qpdg1 > 1 and Qpdsi9 <> 1 Qpdg17. Can I just check, have you ever

extended, renewed or defaulted on a payday loan?

1. Yes – extended or renewed 2. Yes - defaulted 3. No 4. Don't know 5. Refused

ASK IF Qpdg1 > 1 Qpdg18. Have you ever

taken out a loan with another payday loan company in order to pay off a loan from another lender?

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qpdg1 > 1 Qpdg19. And have you ever

been refused a loan with another payday lender before taking out a loan with [name of sampled lender]?

1. Yes 2. No 3. Don't know

24

4. Refused

25

PART 3 – FINANCIAL CIRCUMSTANCES / ATTITUDES This section collects information on financial circumstances and attitudes that can be used to better illustrate the profile of PDL customers. ASK ALL I'd now like to ask some general questions about your financial circumstances ASK ALL Qfc1. Do you have a bank account that is provided by a bank, building society or credit union, either in your own name or joint names. Please do not

include a Post Office Card Account or POCA.

1. Yes 2. No 3. Don't know 4. Refused

ASK ALL Qfc2. Have you been overdrawn on (any of) your bank account(s) in the last 12 months

?

1. Yes 2. No 3. Don’t have an overdraft facility 4. Don't know 5. Refused

ASK IF Qfc2 = 1 Qfc3. Have you gone over your agreed overdraft limit on any of your accounts in the last 12 months

?

1. Yes 2. No 3. Don’t have an overdraft facility 4. Don't know 5. Refused

ASK ALL Qfc4. Do you currently have any credit cards that you hold in your own name or jointly with someone else? Please include any that are not in use.

1. Yes 2. No 3. Don't know 4. Refused

ASK IF Qfc4 = 1 Qfc5. Have you been unable to make the minimum payment on (any of) your credit cards at any time in the last 12 months

?

1. Yes 2. No 3. Don't know 4. Refused

ASK ALL Qfc6. Please can you tell me which of the following you have had in the last 12 months

, whether in your own name or jointly with someone else?

26

DO NOT INCLUDE MORTGAGES. READ OUT AND CODE ALL THAT APPLY.

1. A savings account 2. A loan from a company that collects payments from your home (home credit) 3. A loan from a pawnbroker 4. A loan from a credit union or other community finance organisation 5. A loan from an unlicensed lender who charges interest, sometimes called a loan shark 6. A loan from the Social Fund 7. Goods bought on credit (including hire purchase, mail order, rent to buy) 8. Goods bought using a store card 9. Any other type of loan from a bank, building society or finance company 10. None of these [SINGLE CODE] 11. Don't know 12. Refused

ASK IF ANY OF CODES 1-8 SELECTED AT Qfc6 Qfc7. Now thinking about these loans and other credit agreements, have you been unable to make the repayments on these on time on any occasion in the last 12 months

?

1. Yes 2. No 3. Don't know 4. Refused

ASK ALL Qfc8. In the last 12 months, have you and your household been unable to pay any of these bills at the final reminder due to a lack of money? READ OUT AND CODE ALL THAT APPLY.

1. Rent or mortgage payments 2. Council tax 3. Gas, electricity or other fuel bills 4. Water bill 5. Telephone bill – including mobile phone/broadband 6. TV licence 7. Income tax or VAT payments 8. Any other bills (special) 9. None of these [SINGLE CODE] 10. Don't know 11. Refused

ASK ALL Qfc9. Have you, (or your partner), experienced any of the following things in the last five years? READ OUT EACH AND CODE ALL THAT APPLY. [RANDOMISE ORDER OF LIST]

1. Bad credit rating with a credit reference agency 2. County court judgment 3. Visitors from debt collectors or bailiffs 4. Threats or repossession or eviction from home 5. Made arrangements with creditors to pay off arrears (including arrangements set-up by a debt advice agency or

debt management company or an IVA)

27

6. Made a Debt Relief Order or been made bankrupt 7. Had gas, electricity or phone cut-off due to non-payment 8. None of these [SINGLE CODE] 9. Don't know 10. Refused

ASK ALL Qfc10. Now thinking about the general financial situation of your household in the last 12 months

, how often have you run out of money before the end of the week or month? Include any times when you have used a credit card or overdraft to get by.

Would you say it was... READ OUT [REVERSE ORDER OF CODES 1-5 FOR HALF SAMPLE]

1. Always 2. Most of the time 3. Sometimes 4. Hardly ever 5. Never 6. SPONTANEOUS ONLY: Don't know / too hard to say / varies too much 7. Refused

ASK ALL Qfc11. And thinking back over the last five years, has your financial situation got better worse or stayed the same?

1. Better 2. Worse 3. Stayed the same 4. SPONTANEOUS ONLY: Fluctuated or too difficult to say 5. Don't know 6. Refused

[FINANCIAL LITERACY QUESTIONS TO BE ADDED] ASK ALL Qfc12. The following questions deal with life in general, not necessarily with financial issues. People hold different views so there are no right or wrong answers. Could you please tell me whether you agree or disagree that the following descriptions describe you personally

?

[RANDOMISE ORDER OF STATEMENTS]

• I always make sure I have money saved for a rainy day • I try to avoid banks as much as possible • I have a good understanding of financial conditions and terms • I live more for the present day than for tomorrow • I do things without giving them much thought • I am good at resisting temptation • I am good at filling in official forms • I am concerned about giving personal information on the internet • I often take risks with my finances • I often stretch myself financially to support my family

FOR EACH STATEMENT ASK (IF NECESSARY): Do you agree or disagree that this describes you personally?

28

IF AGREE/DISAGREE: Is that strongly or slightly?

1. Strongly agree 2. Slightly agree 3. Slightly disagree 4. Strongly disagree 5. Don't know

29

PART 4 - DEMOGRAPHICS This section will provide a further overview of PDL customers, by key demographics. ASK ALL Qdgen. ENTER GENDER. DO NOT ASK.

1. Male 2. Female

ASK ALL Qdten. Which of the following best describes your housing situation? Do you... READ OUT AND CODE FIRST THAT APPLIES

1. Own your home outright 2. Own your home with a mortgage 3. Rent your home from a private landlord 4. Rent your home from a local authority or housing association 5. Part buying-part renting your home through a shared ownership scheme 6. Live with parents 7. Or have some other living arrangement? 8. Don't know 9. Refused

ASK ALL Qdwork. And which one of these descriptions best applies to your current situation? Are you... READ OUT AND CODE FIRST THAT APPLIES. IF CURRENTLY OFF WORK BECAUSE OF ILL HEALTH OR MATERNITY LEAVE, PROBE TO FIND OUT IF EMPLOYED FULL OR PART TIME.

1. Employed or self-employed full-time (30+ hours per week) 2. Employed or self-employed part-time (less than 30 hours per week) 3. Unemployed and looking for work (including on a government work or training scheme) 4. Looking after the home/caring for family 5. Unable to work because of ill-health or disability 6. Permanently retired from work 7. Or are you in full-time education? 8. Other (specify) 9. Don't know 10. Refused

ASK ALL Qeduc. What is your highest qualification? INTERVIEWER: READ OUT AND CODE HIGHEST QUALIFICATION, I.E. FIRST THAT IS MENTIONED.

1. Higher degree, degree or postgraduate qualification 2. Other higher education qualification below degree level but above A-level 3. A-levels or equivalent 4. GCSEs or equivalent 5. Other 6. Don't know 7. Refused

30

ASK ALL Qdeth. Can I ask which of these best describes you? READ OUT

1. White British 2. White Irish 3. Other White background 4. Mixed 5. Asian or Asian British 6. Black or Black British 7. Chinese 8. Other 9. Refused

ASK ALL Qadult. How many adults currently live in your household, including yourself

? Please include anyone aged 16 or over who lives with you.

IF YES: How many children aged under 16 live here? ENTER NUMBER Refused ASK ALL Qchild. And how many children aged under 16 live with you? ENTER NUMBER Refused ASK ALL Qdinc. Please could you tell me your household's total income

, before tax and any other deductions? This includes earnings from employment or self-employment, income from benefits and pensions, and income from other sources such as interest from savings.

You can answer in annual, weekly or monthly terms – whichever is easiest for you. IF RESPONDENT DOES NOT KNOW EXACT AMOUNT, ACCEPT BEST ESTIMATE. IF NECESSARY: Income information will only be used for analysis purposes. Annual Monthly Monthly Under £2,500 Under £200 Under £50 £2,500 - £4,999 £200 - £399 £50 - £99 £5,000 - £9,999 £400 - £829 £100 - £199 £10,000 - £15,999 £830 - £1,329 £200 - £309 £16,000 - £19,999 £1,330 - £1,649 £310 - £389 £20,000 - £24,999 £1,650 - £2,099 £390 - £489 £25,000 - £29,999 £2,100 - £2,499 £490 - £579 £30,000 - £34,999 £2,500 - £2,899 £580 - £679 £35,000 - £39,999 £2,900 - £3,349 £680 - £769 £40,000 - £44,999 £3,350 - £3,749 £770 - £869 £45,000 - £49,999 £3,750 - £4,149 £870 - £969 £50,000 or more £4,150 or more £970 or more Don't know Refused

31

ASK ALL Qdinc2. And, can I just check, would you say that you receive your income on a steady basis, or does the amount vary significantly from week-to-week or month-to-month?

1. Steady income 2. Varies 3. Don't know 4. Refused

ASK ALL Qrecon. Thank you very much for taking the time to speak to us today. We may be conducting further research relating to the Competition Commission's Payday Lending Inquiry. Would you be willing to be re-contacted by any of the following about this research if it were necessary? READ OUT AND CODE ALL THAT APPLY.

1. The Competition Commission 2. TNS BMRB, on behalf of the Competition Commission 3. Another Market Research Agency, on behalf of the Competition Commission 4. None of these